The steel manufacturer GeoSteel has marked a year and a half since successfully completing the second tranche of its Sustainability-Linked Bond (SLB) program. The company issued the second tranche with the support of Galt & Taggart and repaid it within the predetermined timeframe.
Under the program, the company issued and placed a total of $20 million in bonds, of which the second tranche accounted for $5 million. This program represents the first SLB program in Georgia, and remains the only offering from the heavy industry sector in the country.
The first tranche, issued in April 2023 for $15 million, was the company’s first-ever corporate bond issuance, carrying a 9% interest rate. The second tranche was placed at an improved rate of 8.50%, made possible by oversubscription, which reached 150% of the offered volume. Across both tranches, the company attracted 75 investors, with a maturity period of two years.
A Strategic Decision — Why SLB?
“Unlike traditional borrowing instruments, SLBs gave us the opportunity to demonstrate tangible progress in workplace safety and emissions reduction,” representatives of GeoSteel explained. “At the same time, this step helped us attract a more diversified investor base and secure better financing conditions. It also showed stakeholders that sustainable development is a central part of our growth strategy and risk management.”
The company’s management noted that issuing Sustainability-Linked Bonds (SLBs) was a strategic choice aimed at embedding accountability into the company’s financing structure.
ESG Results — What Changed?
Within a year and a half after issuing the bonds, GeoSteel achieved significant progress:
• LTIFR (Lost Time Injury Frequency Rate): workplace safety indicators improved.
• CO2 emissions: emissions reduction targets were achieved ahead of schedule.
• Corporate governance: higher transparency standards strengthened investor confidence.
• Early repayment of obligations: fulfillment of KPI targets enabled early repayment.
“The key performance indicators encouraged targeted operational changes, resulting in measurable improvements in both safety and emissions reduction,” GeoSteel stated.
Systemic Importance for Georgia’s Market
The full cycle of GeoSteel’s SLB program represents an important precedent for Georgia’s corporate bond market. The company established:
* A model for documentation standardization
* A catalyst for increased investor confidence
* Greater accessibility of ESG-linked bonds for other Georgian companies
* The country’s first ESG-linked financing model in heavy industry
This experience is considered a successful example of implementing the International Capital Market Association Sustainability-Linked Bond Principles in the local market.
By Team GT
